Capping Interchange Fees to impact Payment Card Usage

BRUSSELS | A survey commissioned by MasterCard looked at consumer opinions on the European Commission's proposal to cap interchange fees and introduce measures that could impact payment card usage. According to the results 82% of consumers believe that retailers would not pass on any cost savings from a reduction in their contribution to the costs of the electronic payments system.

What are Interchange Fees again?

Interchange is a small fee paid by a merchant's bank (also known as the acquiring bank) to the cardholder's bank (the issuing bank)  as part of an electronic payment card transaction. The interchange fee is to compensate the issuing bank for a portion of the risks and costs it incurs for the issuance of cards. This fee promotes a competitive and efficient global electronic payments network for consumers, merchants and society. Interchange fees are set by card schemes like MasterCard, Visa and American Express. Acquiring banks pass on these interchange fees to merchants accepting card payments. They are a considerable part of the merchant service charge merchants pay to their acquiring bank or card payment provider for processing and settling card payments on their behalf.

Caps would drive costs of cards up

MasterCard has consistently expressed its concern that the proposed caps would drive the cost of cards up for consumers. This concern is based on recent practical experience from countries like Spain, where legislation to cap interchange fees resulted in cardholder fees increasing by over 50% and no evidence of retailers passing on savings through lower prices. It also stems from the absence of any justification for fixing the same fees across over 30 countries where market conditions vary considerably.

Retailers would decide which cards they will or will not accept

The survey also indicates that consumers are especially critical of a proposed rule that would give retailers the right to decide which specific cards they will or will not accept. Breaking up the so-called “Honour All Cards Rule” would deprive consumers of the number one quality they look for in payment cards – the certainty they can use it wherever they go around the world. 8 in 10 consumers (77%) across Europe felt this measure could make using bank cards worse for them. Similarly, 60% are concerned that proposals to allow for multiple logos on the same card would have negative impact on consumers.

'Consumers pay the bill' 

 “Any new legislation on electronic payments should act in the best interest of card users. We commissioned this survey because of growing concerns that forcing down interchange fees artificially would drive up the cost of cards and prevent all market players from playing by the same rules. The results suggest that consumers across Europe share these concerns, and believe that the measures on the table are not in their interest,” said Javier Perez, President, MasterCard Europe. “It is unclear how the “one-size-fits-all” approach to capping cross-border and domestic interchange fees at apparently arbitrary levels can be justified. This is not a theoretical concern – it is based on evidence of what happened in countries like Spain when interchange was forced down artificially, and consumers were the ones who footed the bill.” continued Mr. Perez. Mr. Perez concluded, “At MasterCard, we share the European Commission’s objective of creating an efficient, competitive and innovative payments market. However, we are concerned that some of the proposals, do not support these goals and will actually harm and inconvenience consumers.”

About the IPSOS Survey

The research was conducted by global research company Ipsos on behalf of MasterCard. Approximately 1000+ individuals participated on a country by country basis via the Ipsos Online Panel in the following countries: Croatia, Czech Republic, Finland, France, Germany, Great Britain, Italy, the Netherlands, Poland, Portugal, Slovakia, Spain and Sweden. The precision of Ipsos online polls are calculated using a credibility interval. In this case, a poll of 1,000 is accurate to +/- 3.5 percentage points. Respondents were provided with background on the issue of interchange rates. The full results of the research can be found here.


About the article

Excerpts were taken from MasterCard's press release, February 14th, 2014. For comments please send an email to





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